Trump’s Economic Adversary: NAFTA

To renegotiate NAFTA may not be easy; and it still stands conjectural.

Economic anxieties present in the United States have resulted in arguably the largest populist wave since FDR’s New Deal, even though the turnout was in-fact the lowest in decades. And, to Trump’s benefit, NAFTA’s negative externalities have afforded Trump with a predominately white, blue collar movement prepared to pounce on international power players. Trump’s magical elixirs of economic promises offer hope to those seeking financial assistance – but was Trump’s populist movement justified in reference to his heated arguments against NAFTA, is the question to answer.

This all depends. NAFTA’s positive benefits included an increase in American jobs, lower finished goods import prices, and trade has risen substantially for Mexico. On the other hand, the lowering of tariffs contributed to a max exodus of American manufacturing firms to the developing world, lowered American union wages, and ultimately caused the collapse of the Mexican agricultural sector. But, there are two important positive and negative externalities to centre on: 1) positive, a total increase in trade for NAFTA countries generally, and 2) negative, the naively unanticipated weakening of America’s manufacturing workforce – and, of course, Mexico’s agricultural sector.

Now, a complete overhaul, or major alteration for that matter, “might” fix the major issues with NAFTA’s negative externalities, but it’s a dubious proposal. In addition, relations between the US and Mexico will be tested, and tested strongly. Trump’s catering to right-wing elements residing within the Republican Party is contributing to a sentiment of fear for America’s ally, Mexico. A major issue for Trump if he were to scrap NAFTA could be a sharp rise in the cost of consumer good for American consumers.

Furthermore, both respective workforces would experience a sharp drop in manufacturing employment. But most important, the way in which Mexico has been treated by the Trump campaign could ruin nations with one of America’s most loyal economic partners. If Trump chooses to cut ties from the EU, and both Mexico and Canada – while also increasing tariffs – then America may, once again, become an isolationist-centric nation.

Lastly, Trump’s obsession with rolling back NAFTA may end up riling up those with favourable leanings toward Mexico, such as Mexican-Americans – legal ones at that. If the Hispanic, legal base of the United States feels threatened by Trump’s rapid transition into essentially demonizing Mexican leaders, his level of support will presumably drop. If Trump is such a “calculated, intelligent” politician, why would be unfathomably choose to alienate the largest growing political block in American history?

If Trump was proficient enough in terms of striking the balance between foreign relations and economics, he would tame his rhetoric, implement incremental alterations, and at the least, attempt to comprehend the ramifications of such a major economic decision. However, getting the attention of this unapologetic despot is quite a challenging task.